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Economics · Class 12 Commerce

Ch 4Elasticity of Demand — Class 12 Economics, concept-first.

The Law of Demand (studied in the previous chapter, Demand Analysis) tells us only the DIRECTION in which quantity demanded moves when price changes — it says demand falls when price rises, and rises when price falls, other things remaining constant.

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Price Elasticity of Demand

NCERT Class-11 Introductory Microeconomics, Ch2 Theory of Consumer Behaviour: PRICE ELASTICITY OF DEMAND (Ed) measures the degree of responsiveness of quantity demanded to a change in the good's own price. PERCENTAGE-CHA…

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CA Foundation

2 concepts · 8 appearances

2026, 2025, 2024

Chapter contents

The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.

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Meaning of Elasticity of Demand

The Law of Demand (studied in the previous chapter, Demand Analysis) tells us only the DIRECTION in which quantity demanded moves when price changes — it says demand falls when price rises, and rises…

2

Price Elasticity of Demand — Meaning and Formula

Price Elasticity of Demand () measures the degree of responsiveness of quantity demanded of a commodity to a change in ITS OWN price, all other factors (income, tastes, prices of related goods) remain…

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Types of Price Elasticity of Demand

Depending on the numerical value of , price elasticity of demand is classified into five types. Each type has a characteristic shape of demand curve, so the five are best learnt as a diagram set as we…

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Measuring Price Elasticity — Percentage (Proportionate) Method

The Maharashtra HSC syllabus studies four methods of actually measuring price elasticity of demand from data.

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Measuring Price Elasticity — Total Outlay (Total Expenditure) Method

The Total Outlay Method (also called the Total Expenditure Method), proposed by Alfred Marshall, measures elasticity WITHOUT computing a numerical value of at all — it simply compares the consumer's t…

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Measuring Price Elasticity — Point Method and Arc Method

Point Method (Geometric Method). This method measures elasticity AT A SINGLE POINT on a straight-line demand curve, using only the geometry of the line — the distance from that point to where the line…

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Income Elasticity of Demand

Income Elasticity of Demand () measures the degree of responsiveness of quantity demanded of a commodity to a change in the CONSUMER'S INCOME, price and all other factors remaining constant.

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Cross Elasticity of Demand

Cross Elasticity of Demand () measures the degree of responsiveness of quantity demanded of ONE commodity (say, X) to a change in the PRICE OF A RELATED commodity (say, Y), the price of X itself and i…

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Factors Determining Elasticity of Demand

Whether a commodity's demand turns out to be elastic or inelastic in practice depends on several factors, all part of the standard Maharashtra HSC (MSBSHSE) Std XII Economics syllabus:

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Importance and Practical Applications of Elasticity of Demand

Elasticity of demand is not merely a classroom formula — it directly guides real pricing, taxation and policy decisions, which is why the MSBSHSE Std XII Economics syllabus closes this chapter with it…

Exercises

+Show 6 questions6 questions
  1. Q7Which one of the following values of price elasticity of demand represents a rectangular hyperbola demand curve? (a) $E_d = 0$ (b) $E_d = 1$…Free
  2. Q8A rise in the price of petrol reduces the quantity of cars demanded. Petrol and cars are best described as: (a) Substitutes (b) Complements…Free
  3. Q9State, with reasons, whether the price elasticity of demand is likely to be relatively elastic or relatively inelastic for each of the follo…Preview
  4. Q10In the price range where price elasticity of demand for a commodity is greater than 1, what happens to a seller's total revenue if the selle…Preview
  5. Q11Explain briefly why the government generally prefers to levy commodity (indirect) taxes on goods such as petrol and tobacco rather than on g…Preview
  6. Q12Distinguish between Income Elasticity of Demand and Cross Elasticity of Demand.Preview

Sample & Board Papers

Sample papers and previous-year board questions for this subject.

+Show 36 questions36 questions
  1. Q1Complete the correlation. Perfectly elastic demand : Ed = ∞ :: ______ : Ed = 1.Preview
  2. Q2When the percentage change in quantity demanded is Less than the percentage change in price the demand curve is ______ (a) Flatter (b) Steep…Preview
  3. Q3Identify and explain the following concept. Ramesh's demand for salt remained unchanged lnspite of a 10% rise in its price.Preview
  4. Q4Explain the Ratio method of measuring price elasticity of demand.Preview
  5. Q5Study the following figure and answer the question given below it. Identify the price elasticity of demand from the following diagram: (a) P…Preview
  6. Q6Study the following figure and answer the question given below it. Identify the price elasticity of demand from the following diagram: (a) P…Preview
  7. Q7Study the following figure and answer the question given below it. Identify the price elasticity of demand from the following diagram: (a) P…Preview
  8. Q8Study the following figure and answer the question given below it. Identify the price elasticity of demand from the following diagram: (a) P…Preview
  9. Q9The relationship between income and demand for inferior goods is ______. (a) direct (b) inverse (c) no effect (d) can be direct and inversePreview
  10. Q10Give economic terms: Degree of responsiveness of a change of quantity demanded of a good to a change in its price.Preview
  11. Q11Assertion (A): A change in quantity demanded of one commodity due to a change in the price of another commodity is cross elasticity. Reasoni…Preview
  12. Q12Distinguish between: Unitary elastic demand and Relatively elastic demandPreview
  13. Q13Explain the Ratio or percentage method of measuring price elasticity of demand.Preview
  14. Q14In the following diagram, AE is the linear demand curve of a commodity. On the basis of the given diagram, state whether the following state…Preview
  15. Q15In the following diagram, AE is the linear demand curve of a commodity. On the basis of the given diagram state whether the following statem…Preview
  16. Q16In the following diagram, AE is the linear demand curve of a commodity. On the basis of the given diagram state whether the following statem…Preview
  17. Q17In the following diagram, AE is the linear demand curve of a commodity. On the basis of the given diagram state whether the following statem…Preview
  18. Q18Give economic term: Degree of responsiveness of quantity demanded to change in income only.Preview
  19. Q19Perfectly elastic demand : Ed = ∞ : : _______ : Ed = 0Preview
  20. Q20Distinguish between perfectly elastic demand and perfectly inelastic demand.Preview
  21. Q21Explain the types of price elasticity of demand.Preview
  22. Q22Give an economic term: Elasticity resulting from a proportionate change in quantity demanded due to a proportionate change in price.Preview
  23. Q23Distinguish between perfectly elastic demand and perfectly inelastic demand.Preview
  24. Q24State with reasons whether you agree or disagree with the following statement: Elasticity of demand depends upon several factors. (a) Agree…Preview
  25. Q25Observe the following diagram of the non-linear demand curve and answer the questions given below. If EB = EA (Ed = 1) = ______ If EB > EA (…Preview
  26. Q26Complete the correlation: Salt : Essential good : : Diamond : ______Preview
  27. Q27Demand curve is parallel to ‘Y’-axis - Perfectly inelastic demand Relatively inelastic demand Perfectly elastic demand Unitary elastic deman…Preview
  28. Q28Identify and explain the following concepts: 40% fall in price of a commodity leads to 40% rise in quantity demanded.Preview
  29. Q29Explain the Ratio method of measuring price elasticity of demand.Preview
  30. Q30Observe the following figure and answer the questions given lowing below it: Identify and explain the degree of elasticity of demand in the…Preview
  31. Q31Observe the following figure and answer the questions given lowing below it: Identify and explain the degree of elasticity of demand in the…Preview
  32. Q32Fill in the blank using appropriate alternatives given in the brackets: Income elasticity of demand for inferior goods is _______. (a) posit…Preview
  33. Q33State whether the following statement is True or False: Demand for luxurious goods is elastic. (a) True (b) FalsePreview
  34. Q34Give reasons or explain the following statement: Demand for necessary goods is inelastic.Preview
  35. Q35Write a short note: Geometric method of measuring price elasticity of demand.Preview
  36. Q36What is 'elasticity of demand'? Explain the types of elasticity of demand.Preview

More questions

+Show 6 questions6 questions
  1. Example 1When the price of a commodity was Rs. 20 per unit, a consumer demanded 100 units. When the price fell to Rs. 18 per unit, the consumer's dem…Free
  2. Example 2A fall in the price of a commodity from Rs. 10 to Rs. 8 per unit causes the consumer's total expenditure on it to rise from Rs. 200 to Rs. 2…Free
  3. Example 3On a straight-line demand curve $DD'$, point $M$ lies such that the lower segment $MD'$ measures 6 cm and the upper segment $MD$ measures 2…Preview
  4. Example 4The price of a commodity was Rs. 15 per unit when 40 units were demanded. The price then rose to Rs. 25 per unit, and quantity demanded fell…Preview
  5. Example 5When a consumer's monthly income rose from Rs. 20,000 to Rs. 25,000, the quantity of a commodity demanded rose from 10 units to 11 units. Ca…Preview
  6. Example 6When the price of tea rose from Rs. 200 to Rs. 220 per kg, the quantity of coffee demanded rose from 50 kg to 55 kg per month. Calculate the…Preview